TELESCOPING THE TIMES The Great Depression
Section 1: The Nation’s Sick Economy
MAIN IDEA As the prosperity of the 1920s ended, severe economic problems gripped
Although the economy of the 1920s boomed, trouble lurked beneath the surface. The
textile, steel, and railroad industries were barely profitable. Mining and lumbering were
in decline. In the late 1920s, the auto, construction, and consumer goods industries
faltered. The biggest problem, though, was in agriculture. Wartime demand for food
dropped, and farmers suffered. Unable to make mortgage payments, many lost their land.
Congress tried to help farmers by passing laws that would boost food prices, but
President Calvin Coolidge vetoed them.
Farmers, short on money, bought fewer goods. That trend, combined with the consumer
debt load, cut consumer spending. Consumer spending was also hurt by low incomes.
These problems were not completely evident in the 1928 presidential election.
Republican Herbert Hoover, pointing to years of prosperity under presidents Harding and
Coolidge, won the election over Democrat Alfred Smith.
Meanwhile, the stock market continued its amazing rise. People bought stocks, hoping to
become rich. Many bought on margin, borrowing against future profits to pay for stocks
today. If prices did not rise, though, there would be trouble. Stock prices began a decline
in September of 1929. On October 29, known as Black Tuesday, they plunged sharply.
More than 16 million shares of stock were sold that day until no more willing buyers
could be found. By mid-November investors had lost more than $30 billion.
The Depression spread around the world. The drop in consumer demand in the United